investor and analyst call fy 2017 - zf.com · one company investment grade change in leadership ......
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Investor and Analyst Call FY 2017
Dr. Konstantin Sauer | CFO
ZF Friedrichshafen AG
© ZF Friedrichshafen AG
Highlights 2017
Strategic Positioning Sale of Body Control Systems
Change in Leadership One Company Investment Grade
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© ZF Friedrichshafen AG
Vision Zero Ecosystem
3
2017
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© ZF Friedrichshafen AG © ZF Friedrichshafen AG
Radar
LiDAR Supercomputer ZF ProAI
Electric Drive
Integrated Brake Control
Active Damping System Active Seat Belt System
Electric Power Steering Camera
Active Reare Axle Steering
Investor and Analyst Call FY 2017 4
© ZF Friedrichshafen AG © ZF Friedrichshafen AG
AVE -130 System
8-speed hybrid transmission (8HP Hybrid)
8-speed dual clutch transmission (8DT Hybrid)
CeTrax TraXon Hybrid
EVD2 ZF-ERGOPOWER (5-speed)
The Future is Electric – in all Sectors
Investor and Analyst Call FY 2017 5
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System Integration
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Modular axle system with integrated electric drive
mSTARS
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2.9 million 8-speed automatic transmission 2017
Automatic Transmissions with more efficiency and hybrid options
Intelligent Mechanical Systems – Powertrain
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© ZF Friedrichshafen AG
Financial Figures 2017
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© ZF Friedrichshafen AG
€36.4 billion Sales
146,148 Employees
€2.2 billion Research & Development
€1.4 billion Investments in property, plant and equipment
€2.3 billion Adjusted EBIT
€1.9 billion Reduction of Gross Debt
Financial Overview 2017
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© ZF Friedrichshafen AG
Organic Sales Growth at 6%
36,444
2016
35,166
2017
3.6%
Sales in € million
Developments
Sales growth at 3.6%
Thereof organic: + 6.0%
Thereof FX effects: - 1.5%
Thereof M&A effects: - 0.9%
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© ZF Friedrichshafen AG
Europe
Asia-Pacific
Africa
27% 48%
17,394
7,775
10,010
3%
North America
South America
1,066
21%
199
1%
Organic growth in 2017
Sales by Regions
Sales in € million and in % of sales
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13,970 13,645
Sales by Divisions
Adjusted by sales share of Parts & Services
Business with automatic transmissions was the strongest growth driver
Overproportional growth in Asia-Pacific, negatively affected by exchange
rate effects and sales development in North America
Growth through market development in China as well as the positive
turnaround in Russia and Brazil
Increased sales in the business unit “Off-Highway Systems” could nearly
offset the sales decrease in the wind power sector
Sales increase despite the disposal of business units in 2016
Sales increase of approx. 7%
Organic growth above 9% due to high demand for hybrid modules and
control systems
Car Powertrain Technology
Car Chassis Technology
Commercial Vehicle Technology
Active & Passive Safety Technology
Industrial Technology
E-Mobility
ZF Aftermarket
2016
2017 7,981
8,725
6,484 6,447 2016
2017
3,172 2,960
2,530 2,552
862924
3,007 2,815
2016
2017
2016
2017
2016
2017
2016
2017
2016 2017
Sales in € million
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© ZF Friedrichshafen AG
R&D Budget and Investments in PP&E
2017
1,350
2016
1,185
+14%
3.4%
2017
2,230
2016
1,948
+14%
5.5% 6.1% 3.7%
R&D Expenses in € million and in % of sales
Investments in PP&E in € million and in % of sales
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© ZF Friedrichshafen AG
Increased R&D Expenses Compensated by Operational Performance
2017
6.4%
-7.2%
-6.1%
17.3%
-7.3%
6.4%
1.7%
18.0%
2016
-5.5%
1.9%
Gross margin
R&D expenses
SG&A Adjustments (PPA) and others
Adjusted EBIT margin in %
Developments
Stable adjusted EBIT margin
Improvement of gross margin driven by higher
operational performance
Increased R&D expenses to strengthen ZF’s
technological position
Negatively affected by FX effects
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© ZF Friedrichshafen AG
Stable Adjusted EBIT Margin
2017
2,339
2016
2,239
4.5%
6.4% 6.4%
Adjusted EBIT in € million and margin in %
Developments
Stable adjusted EBIT margin
Improvement of gross margin driven by higher
operational performance
Increased R&D expenses to strengthen ZF’s
technological position
Negatively affected by FX effects
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© ZF Friedrichshafen AG
568
1,771
Purchase price allocation
EBIT
2,339
Adjusted EBIT
598 -37
Purchase price allocation
EBIT
1,678
Book gain from disposals
Adjusted EBIT
2,239
6.4% 4.8% 4.9% 6.4%
Stable Adjusted EBIT Margin
EBIT and Adjusted EBIT 2016 in € million and margin in %
EBIT and Adjusted EBIT 2017 in € million and margin in %
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© ZF Friedrichshafen AG
Net Profit Positively Influenced by Tax Effects
924
+26%
2016
1,167
2017
Net Profit After Tax in € million
Developments
Decrease of financial expenses mainly driven
by lower financing costs
Reduced tax expenses in 2017 mainly due to
US tax reform and prior year effects leading to
a tax rate of 17.2%
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Adjusted Free Cash Flow at €1.8 Billion
2,000
-342
2,342
Adjusted free cash flow Adjustments Free cash flow
31
1,818 1,787
2017 2016
Adjusted Free Cash Flow in € million
Developments
Free Cash Flow at €1,787 million in 2017
Adjustments for M&A activities comprise
2016: Sale of Cherry and Fasteners, acquisition of
shares in Haldex, Ibeo and doubleSlash
2017: Investments through
Zukunft Ventures GmbH
Strong Adjusted Free Cash Flow at €1,818
million in 2017
due to improved operating activities
higher investments
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© ZF Friedrichshafen AG
Developments
Gross debt reduced by €1.9 billion
since December 31, 2016
Net debt reduced by €1.6 billion
Deleveraging strategy confirmed
by rating agencies:
S&P: BBB– (stable outlook)
Moody‘s: Baa3 (stable outlook)
6,391
1,315
5,076
Debt Reduction Strategy Confirmed by Rating Agencies
2017
Note: Gross debt = Financial liabilities ./. derivative financial instruments
1,627
8,262
6,635
2016
Gross debt Net debt Cash
Gross/Net Debt in € million
Upgrade to Investment
Grade
Investor and Analyst Call FY 2017 20
© ZF Friedrichshafen AG
Maturity Profile Further Smoothened in 2017
Note: Excluding bilaterals worldwide which are rolled in the ordinary course of business.
325 42507 345
1,150 1,075457
14
518
6
898583
3,000
9081,192
964
14
8631,081
0
898
2018 2019 2020 2021 2022 2023 2024 2025
Bonded Loans EUR Bonds USD Bonds Other SynLoan RCF (undrawn)
Maturity of Main Group Financings as of December 31, 2017 Nominal amounts in € million
Investor and Analyst Call FY 2017 21
© ZF Friedrichshafen AG
Equity Ratio Increased to 24 %
62%
Pension provisions
2017
29,128
14%
-1,295
2016
21%
65% Other liabilities/ provisions
24%
14%
27,833
Equity
Developments
Equity ratio increased by 3 percentage points
to 24 % due to improved equity and reduced
balance sheet total
Equity increase by €670 million mainly due to
positive net profit after tax
Balance sheet total decrease by €1,295 million
due to further debt pay-down and FX effects
Liabilities and Equity in € million and in % of balance sheet total
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© ZF Friedrichshafen AG
Financial Key Figures Improved
2016 2017
35,166 36,444
2,239 (6.4%) 2,339 (6.4%)
924 1,167
2,000 1,818
6,635 5,076
Sales
Adjusted EBIT (margin)
Net Profit after Tax
Adjusted Free Cash Flow
Net Financial Debt
Financial Key Figures in € million
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Outlook 2018
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Market Development 2018
US economy in solid growth phase, partly supported by tax reform in 2017.
NORTH AMERICA
Economic crisis 2014-2017 (esp. Brazil and Argentina) Recovery has gradually started, only slowly accelerating
SOUTH AMERICA
Stable positive economic development in Europe and Germany
EUROPE
China economy fueled by Government investment growing in the defined corridor, expansive fiscal policy Emerging markets without surprising impulses
ASIA
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© ZF Friedrichshafen AG
Outlook 2018
Sales:
~ €36.5 billion
EBIT margin *:
~ 6% Free cash flow*:
> €1 billion * adjusted
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© ZF Friedrichshafen AG
This presentation has been prepared by ZF Friedrichshafen AG solely in connection with the release of the year-end results 2017 as of December 31, 2017 on March 22, 2017. It does not contain or constitute an offer, invitation or recommendation to purchase or subscribe for any securities issued by ZF Friedrichshafen AG or any subsidiary and neither shall any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.
Neither ZF Friedrichshafen AG nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss that may arise from any use of this presentation or its contents or otherwise arising in connection with this presentation.
This presentation includes, beside statements of facts, also assumptions, estimates, forecasts and other forward-looking statements, including statements about our beliefs and expectations regarding future developments, earnings capacity, plans and business growth of ZF (“Forward Looking Statements”). These Forward Looking Statements are subject to risks and uncertainties, as they relate to future events, and are based on plans, estimates, assessments and projections made to the best of our present knowledge. Therefore, these Forward Looking Statements speak only as of the date they are made, and we assume no obligation to update or revise publicly any of them in light of new information or future events or developments. Although ZF Friedrichshafen AG is of the opinion that these statements, and their underlying beliefs and expectations, are realistic as of the date they are made, no guarantee is given that the expected developments and effects will actually occur. Actual results, performance, developments or events may differ materially from those expressed in the Forward Looking Statements due to, for example and without limitation, changes in general economic and business conditions, political changes, changes to the taxation of corporations and other changes in laws, regulations and jurisprudence, fluctuations in currency exchange rates or interest rates, the introduction of competing products, the lack of acceptance for new products or services and changes in business strategy.
All statements with regard to market position(s) of ZF or any of its competitors are estimates of ZF based on data available to ZF. Such data are neither comprehensive nor independently verified. Consequently, the data used are not adequate for and the statements based on such data are not meant to be, an accurate or proper definition of regional and/or product markets or market shares of ZF and any of the participants in any market.
Unless otherwise stated, all amounts are shown in millions of euro. Please note that differences may arise as a result of the use of rounded amounts and percentages.
DISCLAIMER
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